When it comes to natural resources such as metals, oil, gas and so forth, what do they all have in common? They’re non-renewable. Certainly more deposits can be discovered, but in general for every piece of gold or silver we mine up, another piece like it is not going to be generated for thousands if not millions of years. This can be seen especially with zinc, where shortages are reportedly inevitable.
Then why hasn’t the price gone up to meet this shortage expectation? And if the prices haven’t gone up, why are companies like Xstra and Glencore International, or Canadian Zinc and Paragon Minerals putting in for mergers with zinc as the primary motivation?
As for why zinc hasn’t gone up in price just yet, we can only speculate. Perhaps some people don’t believe the shortage is inevitable, or there’s so much zinc on the market right now it’s flooded it enough to keep its prices stable rather than rise.
As for why companies are merging to gain access to as much zinc as possible, that should be self-explanatory. Do you think people like Charles Reed Cagle, CEO of HEI Resources made their fortune by buying high priced shares? No, a smart company buys shares while they’re low when they have a good chance of increasing in price.
In the case of zinc this price hike is inevitable. Eventually it will become scarce enough that companies will make a huge profit selling any amount of zinc that they invest in right now. In the case of Xstra and Glencore International this is going to be a huge boom. Between them, they would control 9.1% of the global refined zinc market, a large enough amount that the merger has been delayed by the European steel association.
It’s hard to say when this grabbing at zinc will stop, simply because it already should have. But until the price of zinc begins to reflect its increasing scarcity companies will be investing as much money into it as they can.
It’s a simple case of supply and demand when it comes to zinc, but economics complicates things. The less supply and more demand of something is the more its worth, but the prices of zinc have not yet caught up to this expectation. In the end, when you have a chance to buy into something cheap that is guaranteed to become valuable, you should.
12 replies on “Investments in Natural Resources”
Hmmm, the only zinc I’m familiar with are the ones contained in the daily vitamins I drink :)) Well, time to learn more about them and invest!
I think it’s wise to invest on not so pricey things now that you know will be valuable in the future. The price of a product largely depends on the rules governing supply and demand.
not familiar with the uses of zinc but I guess the supply is abundant still that’s why there is no price hike yet.. let’s see a few more years from now.
I wasn’t aware of this until now when I read your article.
Same here, i don’t know about zinc investments but if there really is a shortage of zinc, one way to know it is through its price. The price must be high when there is shortage or more demand.
I am not into stock market that much and I only learn a little bit about it from my husband who follows and is investing on stock market. I learned that zinc price had gone down like rock bottom. It said that it can be bad for the miners, but good for the investors. Buy low and sell high. That’s all I can say about it and don’t really know much.
I do not know much about zinc 🙁 but like other metal, funds are always important to make a business success 🙂
Investors knows when to buy the investments. They have money’s to spend and pay for somebody to do the investing for them.
i hear this topic a lot especially during the presidential debate. i just hope that the economy will get better and prices will go down especially the gas price.
I’ve read about zinc investment but not as much as with other precious metals. This is a good information if you want to invest on zinc.
True, economics tends to complicate things. I have to admit though, that I never really knew about zinc investments until now. Thanks for sharing this.
I have read that zinc is the fourth most common metal in used trailing are iron,aluminum and copper.The world’s zinc originates from mining about 70%.Zinc is important kind of metallic chemical element,maybe that’s why others would like to invest on that.